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Buying other business

Discussion in 'Lawn Mowing' started by Husker1982, Jan 22, 2003.

  1. Husker1982

    Husker1982 LawnSite Senior Member
    Posts: 478

    I am thinking about buying a business of a local commercial business. There are only 20 accounts but the monthly income is around $3,500.00. I have seen the documents to back the amount of income and the seller is O.K. with the idea of doing a 3 month contract to insure that the clients will be mine for atleast that long. He has agreed to talk with the clients and have them sign a contract under the terms me and him come up with. He is selling for $5,000.00. Wondering if you all think that this is high or how much should a business of this sort sell for. Give me feedback and let me know.
  2. kutnkru

    kutnkru LawnSite Silver Member
    Posts: 2,662

    This may help:

    The steps we recommend for purchasing an established business in our area is:

    1. Consult your accountant

    2. Consult your attorney.

    3. Negotiate the asking price of 30% of annual gross sales
    (+)value of their equipment.

    4. Finalize all business acquisitions under the advisement of your attorney.
  3. bruces

    bruces LawnSite Senior Member
    Posts: 648

    Kutnkru's reply is right on.

    The price seems reasonable, especially if the monthly income is 12 months.

    You want a non compete, introduction to the clients, look at his books, etc., but it doesn't seem to be a bad deal if you can retain the accounts.

    Does he have contracts now?

    If not, it might be difficult to get the customers to sign contracts now.

    Make the price contingent on the amounts you collect. If the customers leave you, you don't pay.
  4. rodfather

    rodfather LawnSite Fanatic
    Posts: 9,501

    $5000 seems extremely fair to me. Let us know how you make out. And make sure you talk with an attorney.
  5. kutnkru

    kutnkru LawnSite Silver Member
    Posts: 2,662

    Governing the Confidentiality of Information and Non-Solicitation of Company Business Or Customers by Contractor after Assignment with the Company.

    This Restrictive Covenant is made between ( Joe Landscaper D.B.A. GREEN ENUFF LAWN CARE, City, State, the Company, Work Designator, and/or John Q. Public, D.B.A. CRIMSON GREEN INC., City, New York, the Sub-Contractor.

    Whereas, the Sub-Contractor expressly understands and agrees to abide by the following covenant:

    In recognition of the value of the trademark, corporate name, reputation, and good will of the Company, and the value of the training and operating methods and techniques of the Company, Sub-Contractor expressly covenants and agrees that in the event his work assignment is completed or terminated for any reason, he will not for a period of 18 months thereafter engage either directly or indirectly as a principal, alone or in association with others: in the solicitation of or in contracting with, existing customers of the company as specifically shown and listed hereto attached, similar services provided such customers by the company.

    In the event that GREEN ENUFF LAWN CARE ceases operation, sells its business and/or accounts, or should become financially insolvent this covenant shall no longer be binding and will be considered null and void.

    I, John Q. Public, the Contractor/Sub-Contractor, Have read, understand, and agree to the above covenant, and so acknowledge by my signature and date below.

    __________________________________ ..... ____________
    Representative Green Enuff ...... Date

    __________________________________ ..... ____________
    Representative Crimson ...... Date
  6. Husker1982

    Husker1982 LawnSite Senior Member
    Posts: 478

    Should have put this in the first time but there is no equipment in this accusation, and he did not have anyone in a contract but does agree to do all the work of getting the customers to sign a contract that me and him come up with. the ones who don't sign i will not have to pay for.
  7. IBGreen

    IBGreen LawnSite Senior Member
    Posts: 726

    Why don't you just put the legwork ito it and in a month or so have 25 or so accounts and be able to price them as you wish.

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